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Aland development bank , abbreviatedLDB, is a special kind ofdevelopment bank inIndia. It is a quasi-commercial type that provides services such as accepting deposits, making business loans, and offering basic investment products. The main objective of the LDB is to promote thedevelopment of land,agriculture and increase theagricultural production. The LDB provides long-term finance to members directly through its branches.[1]
Depending on theirbye-laws or constitutions they provide different functions and structures. Some are organized on astate basis, some on aco-operative basis and some on aprivate basis, incorporating joint stock principles.
The first Land Development Bank was started at Jhang inPunjab in 1920. However, real progress began when the land development bank was established inChennai in 1929.[2] Not only that, land banks, land mortgage banks, agriculture banks, agriculture development banks are now called land development banks in modern world.
The sources of funds of land development banks can include:
Land development banks provide long-term funds for various agriculture related projects besides development of land and business. The borrowing capacity of a member is generally determined according to the number of shares he holds in the bank. The loans granted by land development bank is typically repayable within a 20 to 30-year period. Normally, loans are granted up to 50% of the value of the land or up to 30 times the revenue. Loans are granted only after a thorough verification of security title-deeds as well as the necessity for the loan. The rates of interest for LT loans are generally low and within the paying capacity of farmers. They are around 11 to 12%.
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